Real estate is one of the most important pillars of the Indian economy. The real estate sector contributes appproximately7.8% to India’s Gross Domestic Product ( GDP) and is second to the IT industry in terms of job generation. Thus, with numerous taxes already in place, such as service tax and VAT, with GST in the picture, the indirect taxation in this sector is remodeled recognizing its potential. 

The implementation of this tax law will, on its own, address the problems facing the real estate sector thus enabling it to emerge from its long dormancy. GST brings clarity in the operation of the real estate market, and the estimated price rise for new residential properties may be lesser than for new commercial properties. In order to minimise the cost of purchasing houses for buyers as under the previous tax system, they had to pay service tax and VAT on the purchase of residential units as sold before they were built, developers had to pay excise duty, customs duty, CST, entry tax which is non-creditable tax cost on their business side. But, with a single tax rate, developers can have GST production incentives charged for utilities and products bought by them, which will lower their expenses and will be passed on to consumers. 

In an effort to stimulate demand in the middle of a persistent recession, the government drastically lowered the rate of GST on property transactions. This could possibly cut the purchaser’s pay-out by 4-6 per cent of the total purchase. Although the government has already lowered the GST rate for real estate and there could be no scope for further lowering rates for the sector. But lowering rates for other goods and services could cause investment in real estate at a time when home prices have plummeted due to the economic crisis following the Coronavirus pandemic. 

Goods and services tax has made the housing affair cheaper, as tax chaos has had an effect on real estate prices. A reduction in GST prices and stamp duty charges along with a rise in the income tax exemption limit will definitely accelerate the demand among buyers during these tough times. Decreased ready-to-counter prices would come as a relief to help transform housing demand. As a result, the real estate industry needs concrete steps to resurrect demand and address the concerns of its stakeholders. 

Builders are also providing buying rewards, such as price security plans, flexible payment systems, and deals such as waiving stamp duty and licencing fees to guarantee purchases. Many developers are trying to sustain their margins and do not have too much room to further reduce costs. Lower prices are successful as they can help to minimise inventory, but it may not be the most attractive alternative. We hope that the Government and the Authorities can help Real Estate re-initiate the building activities so that by Diwali, it begins to recover.